Contract Working ?s

mbalbritton

mbalbritton

#@$%!
Joined
Mar 22, 2005
Location
Lakeland, FL
I know we must have memebers here that contract work. Got a few questions on Contract working. Seeing as I've never done this or explored Contract Working, I'm looking to better understand.

There's a possibility for an opportunity to sign on under a company to do Graphic work for. It would mean Incorporating myself, and taking care of my own taxes. This is a chace to turn Crazy8Graphics into a real live business. :lol:

My questions lie in how do I account for my taxes? How do I account for Write offs? How do I take advantage of as much as possible so I get the best return on my $$$'s The basics That I do know are to keep record off anything and everything I buy that I can find a way to relate to business. and report it for write offs.

Any suggestions for good LAYMAN reference materials I can review are appreciated. Oh and for now, I need this in simple terms, so Shinton, you start spouting off techincal crap and it's gonna be :confused:
 
Well you have the basic idea. Save receipts for everything you buy. Write on back what is was for if not evident on ticket. Keep record of miles on car, truck or what ever. PITA. but necessary. Maintenance on travel car and so on. There are some good PC programs that will help with all this. Biggest secret is to do it daily, do it often. And as far as taxes, allocate a % of each check for them. Don't let it pile up on you.
 
Taxes ~ 25% of net will get you real close.

1 other point.Everyone and their brother will tell you to incorporate yourself as you said. Research this. It really isnt a major advantage, and is more costly than anyone will tell ya.

For the past 3 years I have done over $250k gross on a DBA/sole proprietership (sp?)...there are no huge tax advantages to incorporating no matter what ya hear on TV at midnight.

As for info Quickbooks is amazingly versatile, we are considering switching over after a little further investigation. Year 1 I paid a CPA, ever since I have done it myself.
 
FWIW; DBA/SolePro were good in the old days when people didnt sue everyone... Its easy to do an LLC and it protects your personal assets.
 
The purpose of incorporating is a matter of liability protection more than tax breaks. If you plan on doing large graphics jobs and feel like you need protection from lawsuits than the corporate path is the correct path. As for taxes keep perfect books of both incomes and expenses including write-offs and promotions, then find a good accountant. I pay about $200 a quarter for my CPA to do my filings. It is well worth the money. Programs like quick books do a great job helping you track your expenses. The benefit of the CPA is that they stay current on the tax laws and do a great job of finding write-offs that you may not think of.

Just me .02 cents.

Brad
 
So a very simplified way of thinking about it is:

1.Figure ~ 25% of Pay to go to an account set-up for "Save this for April 15th"

2.Save and record all reciepts that can be written off and what it was for.

3. Write off all above reciepts and expenses, Calculate taxes, and balance with what it's the "Save for April 15th" Account. Pay the taxes and keep what's left over or find a way to pay for remainder.

Simplified, but is that about right?

Thanks and keep the info coming
 
mbalbritton said:
So a very simplified way of thinking about it is:

1.Figure ~ 25% of Pay to go to an account set-up for "Save this for April 15th"

2.Save and record all reciepts that can be written off and what it was for.

3. Write off all above reciepts and expenses, Calculate taxes, and balance with what it's the "Save for April 15th" Account. Pay the taxes and keep what's left over or find a way to pay for remainder.

Simplified, but is that about right?

Thanks and keep the info coming
Click to expand...

I thought March 15 was tax day for businesses :flipoff2:
 
Yo,

I incorporated myself years ago to do Pro/E design work for a large corporation. So, here is how it went:

-Got myself a gov'ment EIN number (tax ID) and was a PIA..
-Created a LLC to insulate my personal items from any law suit, cheap and easy to do and WELL worth the effort..
-Purchased a $1M liability insurance policy ~ $400/yr
-Purchased workmans comp insurance..don't remember cost..
-Taxes are straight forward using Taxact (free) or Turbo Tax Business edition..fundamentally a good choice for any DIY'ers..
Will have to estimate, report and pay income taxes on a quarterly basis...
-Did not claim my home as an office...too complex and not worth the effort in my situation and if you sell home within next 5 years, those small deductions will have to be paid!
-Get everything agreed upon in writing and signed!

Not everything I had to do and purchase may affect you. Some of this stuff may have changed. You may want to consult a CPA. Its tuff getting started and keeping the tax snatchers happy.

I am not a CPA nor a lawyer. So all the above was strictly my past experiences. Be ready to give up much of your free time and best of luck.

:beer: :popcorn:
 
If you are going to incorporate take a look at legalzoom.com Brent. It is fairly cheap and very much painless. They take care of all the paperwork and get you your Tax IDs and what not.
 
mbalbritton said:
So a very simplified way of thinking about it is:
1.Figure ~ 25% of Pay to go to an account set-up for "Save this for April 15th"
2.Save and record all reciepts that can be written off and what it was for.
3. Write off all above reciepts and expenses, Calculate taxes, and balance with what it's the "Save for April 15th" Account. Pay the taxes and keep what's left over or find a way to pay for remainder.
Simplified, but is that about right?
Thanks and keep the info coming
Click to expand...
Keep it simple and cheap while getting started just like stated above. If your first customers don't require insurance, then hold off until you need it. It's not like you are a major liability while designing graphics.
Don't volunteer your info by getting licenses, and going to the IRS and asking if you can give them money. That will all come as you/if you grow.
Quickbooks is good stuff, I use it for my business. I do have an accountant but I do need it. Be careful of hiring an accountant, they are hard to find a good one and it can take years to find out that they suck (BTDT!:mad: )
Pay quartely taxes to start with and DO save for the IRS so you don't get a little surprize at tax time.
Good luck!
 
I can't see that you'd need to LLC or INC for the type of contracting you'd be doing. Both are more/less a PITA, but easily doable for much less $$ than Joel's option with a little coaching.

I went INC with TF for the personal liability seperation...

I use the advice & services of a great accountant/consultant (on this board BTW) that has done both my personal & business taxes and guided me through the "rough areas"... IMHO, the whole process isn't above the avg. person to understand & do, just takes way to much time to RTFM. IOW, if it takes you a guesstimated 10 hours to figure it all out, it's easier to pay an accountant 2-3 hours to handle it for you.

I use Quicken Small Biz edition (approx. $100) and it does fine for keeping track of everything.
 
OK a few things.

#1 You by law have to file quarterly estimates. Not 1 lump sum.

#2 As to values of Inc. Most if not all lending institutions are not going to issue a loan to a small corp. unless you "personally sign" for the note. You have now lost the corp. umbrella protection of them suing you for the debt.

The other legal concern is if you get sued for breach of contract etc. Again your personal property (except for your house) can be attached to any leins against the corp. in most cases. In NC (and SC) your personal residence is protected from any suit even in DBA/SP set ups.

There is a lot of misinformation concerning personal businesses. Unfortuantely much of it is perpetuated by those who should be best equippped to give legal advice. A lawyer has no benefit to telling you, a DBA is good. However if he advises you to incorporate he can then write articles of incorporation for you, and even ask for reatainage to "protect you since he will always have atty. client privilege."

This is a rip off tactic that is used all too often.
 
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